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BK
Modi to buy out VK from MRL
Veeshal
Bakshi
New Delhi, Jan 2: In A fresh twist to the Modi Rubber
saga, Mr VK Modi has agreed to exit from the company by accepting
an offer for acquisition of his stake by younger brother BK
Modi. The two brothers are close to finalising an agreement
to this effect in which Mr VK Modi will sell his stake, subject
to certain condition. Following this, Dr BK Modi is expected
to approach FIs afresh for buying out their shareholdings on
his own and regain the management control.
Sources said the brothers had been negotiating for nearly two
months, at the end of which Dr Modi offered to buy out Mr VK
Modi, which the latter accepted.
Though the Modi family collectively controls 45 per cent in
MRL post-open offer, the break-up of the stake between the two
brothers is not known. According to sources, a small chunk is
also being held by some other Modi family members who have been
passive investors.
Sources said the two brothers had started serious negotiations
sometime last September on their future course of action. They
had agreed that MRL should be managed by one of them and when
Dr Modi offered to acquire his brother’s stake, the latter agreed.
The deal between is, however, subject to FIs’ approval.
Dr Modi, when contacted, declined to comment while Mr VK Modi
is out of the country.
Mr VK Modi and Dr Modi had been managing MRL together before
FIs decided to take active interest in the management and removed
Dr Modi from the post of MD. FIs reconstituted the board a few
months ago on grounds of mismanagement and currently call the
shots in the company. However, FIs left Mr VK Modi, who was
also a MD, untouched in that board room coup.
The Modis raised their stake to 45 per cent after an open offer
and by purchasing nearly 12 per cent held by Purnendu Chatterjee.
LIC also sold another 9 per cent to the Modis but later went
back on the deal. The transaction is currently in litigation.
The current state of affairs in MRL is primarily due to a stand-off
between the Modis and FIs. Dr Modi has been more vocal of the
two brothers during the past one year and has not minced words
in blaming FIs for the closure of the plant and mounting losses.
Interestingly, Mr VK Modi has been keeping a low profile and
has never given any statement on developments in the company.
MRL is running into losses and its tyre manufacturing unit at
Modipuram in UP has been closed for the past six months. Employees
have not been paid salaries for the past three four months as
well.
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